Two area men admitted to operating a Ponzi scheme that bilked investors out of $8.9 million.

Jasen Snelling, 48, of Cincinnati, and Jerry Smith, 50, of Brookville, pleaded guilty to one count each of conspiracy to commit mail and wire fraud, obstruction of justice and income tax evasion.

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U.S. attorneys said the pair ripped off 72 investors in the Tri-state area between 2003 and 2011 by claiming they were licensed to sell securities.

They told investors they were buying large blocks of stocks in overseas markets that would be liquidated to cash before the close of the trading day. Investors were guaranteed profits of 10 percent to 30 percent, and many victims rolled over their retirement accounts into the scheme.

"Consistent with a classic Ponzi scheme, early investors were paid interest or return of capital payments, which were not generated by investment earnings, but rather by monies solicited from later investors," said U.S. Attorney Carter Stewart. "These payments served to lull the victims into a false sense of security and to prevent or delay the discovery of the fraudulent investment scheme."

Investigators said all claims to their investors were false, and most of the funds were never invested in anything.

Authorities said Snelling and Smith fabricated documents to make it appear that trading accounts had a balance of $8.5 million, when, in fact, the account had a balance of $995.88.

Conspiracy and obstruction are each punishable by up to 20 years in prison, and income tax evasion is punishable by up to five years in prison.

Snelling is currently serving a sentence on state securities fraud charges in Indiana, and Smith is free on bond until his sentencing in September. Snelling will be sentenced in October on the federal conviction.